PER CURIAM. This case raises a question of paramount importance to the
future welfare of this state and its residents: Can a municipality use
the power of eminent domain granted to it by the Economic Development Corporations
Act … to condemn property for transfer to a private corporation to build
a plant to promote industry and commerce, thereby adding jobs and taxes
to the economic base of the municipality and state? …

The Economic Development Corporations Act is a part of the comprehensive
legislation dealing with planning, housing and zoning whereby the State
of Michigan is attempting to provide for the general health, safety, and
welfare through alleviating unemployment, providing economic assistance
to industry, assisting the rehabilitation of blighted areas, and fostering
urban redevelopment. … To further the objectives of this act, the legislature
has authorized municipalities to acquire property by condemnation in order
to provide industrial and commercial sites and the means of transfer from
the municipality to private users.

What plaintiffs-appellants do challenge is the constitutionality of
using the power of eminent domain to condemn one person’s property to convey
it to another private person in order to bolster the economy. They argue
that whatever incidental benefit may accrue to the public, assembling land
to General Motors’ specifications for conveyance to General Motors for
its uncontrolled use in profit making is really a taking for private use
and not a public use because General Motors is the primary beneficiary
of the condemnation.

The defendant-appellees contend, on the other hand, that the controlling
public purpose in taking this land is to create an industrial site which
will be used to alleviate and prevent conditions of unemployment and fiscal
distress. The fact that it will be conveyed to and ultimately used by a
private manufacturer does not defeat this predominant public purpose. …

The power of eminent domain is to be used in this instance primarily
to accomplish the essential public purposes of alleviating unemployment
and revitalizing the economic base of the community. The benefit to a private
interest is merely incidental. … If the public benefit was not so clear
and significant, we would hesitate to sanction approval of such a project.

RYAN, Justice (dissenting). This is more than an example of a hard case
making bad law[;] it is, in the last analysis, good faith but unwarranted
judicial imprimatur upon government action taken under the policy of the
end justifying the means. …

It was, of course, evident to all interested observers that the removal
by General Motors of its Cadillac manufacturing operations to a more favorable
economic climate would mean the loss to Detroit of at least 6,000 jobs
as well as the concomitant loss of literally thousands of allied and supporting
automotive design, manufacture and sales functions. There would necessarily
follow, as a result, the loss of millions of dollars in real estate and
income tax revenues.

[General Motors had announced its intention to close the plant and move
to the South unless the site of the Cadillac plant could be significantly
improved. GM asked the City of Detroit to make extensive improvements to
the freeways, streets, sewers, and other aspects of the site. If those
changes were made, GM said that it would keep the Cadillac plant open.
The cost of the acquisition of the property and of making these improvements
was over $200 million. The City intended to sell the site to General Motors
for $8 million.] Faced with the unacceptable prospect of losing two automotive
plants and the jobs that go with them, the city chose to march in fast
lock-step with General Motors to carve a “green field” out of an urban
setting which ultimately required sweeping away a tightly-knit residential
enclave of first- and second-generation Americans, for many of whom their
home was their most valuable and cherished asset and their stable ethnic
neighborhood the unchanging symbol of the security and quality of their
lives.

It is plain, of course, that condemnation of property for transfer to
private corporations is not wholly proscribed. For many years, and probably
since the date of Michigan’s statehood, an exception to the general rule
has been recognized. The exception, which for ease of reference might be
denominated the instrumentality of commerce exception, has permitted condemnation
for the establishment or improvement of the avenues of commerce—highways,
railroads, and canals, for example. … It cannot for an instant be maintained,
however, nor has anyone suggested, that the case before us falls within
the instrumentality of commerce exception. … It may be argued, however,
that the fact that the case before us lies outside the exception does not
end the inquiry if the reasons justifying the existing exception are present
here. I turn now to determine whether such reasons exist.

Examination of the cases involving the instrumentality of commerce exceptions
reveal[s] that three common elements appear in those decisions that go
far toward explicating and justifying the use of eminent domain for private
corporations: 1) public necessity of the extreme sort, 2) continuing accountability
to the public, and 3) selection of land according to facts of independent
public significance. …

With regard to highways, railroads, canals, and other instrumentalities
of commerce, it takes little imagination to recognize that without eminent
domain these essential improvements, all of which require particular configurations
of property—narrow and generally straight ribbons of land—would be “otherwise
impracticable”; they would not exist at all. … [I]t could hardly be contended
that the existence of the automotive industry or the construction of a
new General Motors assembly plant requires the use of eminent domain. …

One of the reasons advanced by the defendants as justification of the
taking in this case, and adopted by the majority, is the claim of alleviation
of unemployment. Even assuming, arguendo, that employment per se is a “necessity
of the extreme sort,” there are no guarantees from General Motors about
employment levels at the new assembly plant. … But the fact of the matter
is that once [the Central Industrial Park or CIP] is sold to General Motors,
there will be no public control whatsoever over the management, or operation,
or conduct of the plant to be built there. … The level of employment at
the new GM plant will be determined by private corporate managers primarily
with reference, not to the rate of regional unemployment, but to profit.

With this case the Court has subordinated a constitutional right to
private corporate interests. As demolition of existing structures on the
future plant site goes forward, the best that can be hoped for, jurisprudentially,
is that the precedential value of this case will be lost in the accumulating
rubble.

Questions:

a. Would you characterize what the City of Detroit intends
to do with this land as being the provision of a public good?

b. Justice Ryan describes the area where the taking is to occur
as a “tightly-knit residential enclave of first- and second-generation
Americans, for many of whom their home was their most valuable and cherished
asset and their stable ethnic neighborhood the unchanging symbol of the
security and quality of their lives.” If this description is accurate,
does it raise any special efficiency concerns about the government’s taking
this property at fair market value? Specifically, is there a particular
problem here in under-compensating the residents of Poletown for their
large subjective valuation on their homes and community?

c. Consider this case as an extension of Boomer,
where transaction costs blocked bargaining over a public nuisance. The
courts stepped in to move the entitlement to the party whose use was, presumably,
more valuable. Is that what is really going on in Poletown? The bargaining
costs between GM and the neighbors are so high that, even if the valuation
of GM’s desire to use their property was greater than the valuation on
the neighbors’ desire to remain where they were, no bargain could have
been struck. What the court is sanctioning here is a hypothetical market
transaction that would have taken place but for the level of transaction
costs. Evaluate this interpretation of Poletown.

d. There is no question that maximizing employment and minimizing
the social dislocation of unemployment when an employer leaves town is
a legitimate and worthy governmental goal. What other policies were available
to the City of Detroit in pursuing this goal? How else, other than by taking
this property, might the City have assisted General Motors to remain in
Detroit?

e. How would you have financed these alternative policies?
Would using general tax revenues from all over Detroit or all over Michigan
to purchase the neighbors’ property at their reservation prices have been
more equitable than taking at fair market value?

f. What adverse economic incentives might this decision create
for future business organizations thinking of leaving Michigan? What adverse
economic incentives might it create for municipal governments in Michigan?